NetApp Breaks Out of 2-Year Downward Trend
Some investors prefer to focus on fundamental analysis while others prefer technical analysis. Still others prefer to use a combination of the two analysis styles. This is where Tickeron falls, using both analysis styles. In our opinion, technical factors tend to have a greater influence over the short term while fundamentals are more important over the long run.
Sometimes we see stocks with good fundamentals that enter a downward trend and have a hard time breaking out of it. That is what happened with computer hardware manufacturer NetApp (NTAP). NetApp peaked up near $82 back in September ’18—the prices on the chart below are adjusted for dividend payments. The downward cycle started and over time a trend channel formed that defined the different cycles within the overall downward trend. The stock would eventually hit a low of $33.50 back in March.
The rally off of the March low has moved NetApp back above $60 and it appears that the most recent pop has moved the stock out of the downwardly sloped channel it was caught in for two years.
I have written about NetApp several times over the last few years and I can tell you that the fundamental indicators have been good during this whole time—even as the stock was trending lower. From an article I wrote in November ’18, I can tell you that the company was averaging EPS growth of 21% per year and was expected to see earnings grow by 24% in fiscal 2019.
NetApp’s profitability measurements at the time were impressive. The return on equity was 40.6% and the profit margin was at 19.6%. The operating margin was at 17.15% back then and that was above average compared to other companies.
Flash forward to the current readings and we see that the ROE is at 141.7%, the profit margin is at 20.9%, and the operating margin is 16.6%. These are all still at very impressive levels and instead of a P/E ratio up at 94 like it was in 2018, the P/E ratio is under 20 now.
The decline in the stock caused the sentiment to shift from a slightly bearish position to an extremely bearish position over the last two years. From the article in 2018 I can tell you that there were 29 analysts following the stock with 14 “buy” ratings, 13 “hold” ratings, and two “sell” ratings. At this time there are 27 analysts covering the stock with eight “buy” ratings, 17 “hold” ratings, and two “sell” ratings. The buy percentage dropped from 48.3% to 29.6%.
Short sellers have also increased their bearish posture. In November ’18 the short interest ratio was 3.89 and now it is 8.4. The average short interest ratio falls in the 3.0 range, so the reading from two years ago was slightly higher than average and the current reading is tremendously higher than average.
In addition to the factors listed above, TIckeron's AI platform found additional bullish signals for the stock.
Momentum Indicator for NTAP turns positive, indicating new upward trend
NTAP saw its Momentum Indicator move above the 0 level on June 24, 2025. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 78 similar instances where the indicator turned positive. In of the 78 cases, the stock moved higher in the following days. The odds of a move higher are at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for NTAP just turned positive on July 02, 2025. Looking at past instances where NTAP's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where NTAP advanced for three days, in of 345 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 305 cases where NTAP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for NTAP moved out of overbought territory on June 09, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 52 similar instances where the indicator moved out of overbought territory. In of the 52 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 6 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NTAP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
NTAP broke above its upper Bollinger Band on June 03, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. NTAP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (21.786) is normal, around the industry mean (6.612). P/E Ratio (23.925) is within average values for comparable stocks, (62.645). Projected Growth (PEG Ratio) (0.944) is also within normal values, averaging (55.962). Dividend Yield (0.019) settles around the average of (0.030) among similar stocks. P/S Ratio (3.636) is also within normal values, averaging (12.290).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Advertisement
General Information
Provides data management and storage solutions
Industry ComputerPeripherals
Advertisement